Inflation warning to dairy farmers

Dairy farmers have been warned that inflation could affect them more than any other sector in the next few years.

At the IFA dairy conference in Portlaoise yesterday, Mr Martin Varley, policy development director with the Irish Co-operative Organisation Society, warned farmers that inflation would hit them in three ways.

He said dairy farmers would be affected by higher input costs, increased processing costs, and reduced purchasing power, because of increased living costs.

Mr Varley compared a basket of prices between 1990 and 2000. He said that while the price of cattle fell by 5.5 per cent over that time, motor fuel costs rose by over 40 per cent while veterinary and artificial insemination fees rose by 36 per cent.

He called on the Government to act quickly to control inflation. Mr Varley said investment incentives should be provided for dairy farmers to encourage them to increase the size of their enterprises, thus increasing their viability.

He said farmers should take responsibility for their futures by limiting their on-farm costs, improving their production methods and increasing protein levels. He said it was vital to take this action now, and not in five years' time when the effects of inflation would have already hit.

Several farmers in the profitable dairy sector told the gathering that they could see no reason for their children to continue farming. One farmer said there were only two farmers aged under 25 in his area of Sligo.

Mr Padraig Mulligan of Templeboy, Co Sligo, said farmers had worked to implement farm plans and to increase their enterprise, yet their standard of living was the same as 10 years ago. He said farmers felt they were reaping no rewards for their work.

Meanwhile, the IFA president, Mr Tom Parlon, claimed that dairy processors were not passing on recent price increases to farmers.

He said Irish processors had enjoyed "massive increases in returns" in recent months but farmers were not getting the benefit of the buoyant market.

Processors, he said, were getting an average increase of 12.4 pence per gallon in skim milk powder/butter returns, compared with last year's price. Yet co-operatives had increased prices only by 3p to 4.5p per gallon between May and July.

Irish farmers got a taste of militant French tactics when they were addressed by Mr Philippe Jachnik, who represents a group of French dairy processors. Mr Jachnik told the gathering that French farmers regularly carry out thousands of organised spot checks on pricing in supermarkets and hypermarkets around the country.

This worked to rectify any "exaggerations" in pricing. He said that if farmers were unhappy with a supermarket's policy, they would not cause destruction but would create such a mess that the supermarket would be more inclined to negotiate with them.